Cuyahoga County is taking its time with Quicken Loans Arena plan

A dramatic makeover of Quicken Loans Arena would cost $282 million, including interest.

The $140 million plan to expand and update Quicken Loans Arena is proving to be something of a test for the still-young Cuyahoga County Council, putting it in a spotlight usually reserved for the more visible and argumentative Cleveland City Council.

The result has been a deep dive — lasting five weeks so far — by the council over the deal negotiated over more than 18 months by a team led by County Executive Armond Budish and Cleveland Mayor Frank Jackson.

The Cleveland Cavaliers, who will manage the renovation, would like the deal to move quickly, so they can start construction as soon as the basketball season ends (likely in June).

At a March 14 meeting of what council calls its committee of the whole, eight of 10 members present voted to move the plan on to the agenda of the next full council meeting, set for March 28. Council members Nan Baker and Jack Schron voted against moving the legislation along, preferring that council wait until the state budget is approved in June. Councilwoman Yvonne Conwell was not present at the committee meeting.

"I've done a lot of these," said county financial adviser Timothy Offtermatt, who has served as an adviser and underwriter for professional sports complexes and other similar civic projects across the country. "This is the most debate I've ever been involved in — in like 35 of them."

In part, the complexity of the deal justifies some of the meeting time. But the time also has stretched on as a reaction to the size and early disruptiveness of the overflow crowds, which are the largest the council has ever seen that have shown up at all of the meetings.

That turnout, it appeared, pushed council to delve deeper, triggering some on council to a latent urge to micromanage.

The makeover of the 22-year-old arena is being financed jointly by the Cavs, the city of Cleveland and the county. The deal includes a lease extension that would ensure the Cavaliers will remain at the arena through 2034, a seven-year extension of the existing lease.

Interest on two, $70 million bond issues would bring the cost over 17 years to $282 million. The Cavaliers would pay $122 million of that in increased rent, while the city and county would cover the remaning $160 million.

The rehab will put the existing masonry façade on the north side of the building behind a glass curtain wall that will expand the concourses and create areas for pre- and post-game events.

Cleveland City Council president Kevin Kelley said companion legislation will be introduced to his council on March 20, with hearings to follow over the next several weeks.

The deal is complicated. The arena is publicly owned, by the city and county through the Gateway Economic Development Corp. That's the quasi-public agency created by Cleveland and the three-member Cuyahoga County Commission, which ran the county until the executive-council form of government replaced it in 2011.

The financing plan avoids any tax increases. The county would issue bonds that would be repaid by available funds from existing local admissions and hotel taxes, and from increased rent payments from the Cavs. The city is involved because part of the financing for the renovation will come from a city admissions tax.

The deal piqued the interest of the Greater Cleveland Congregations (GCC), which describes itself as a coalition of faith communities and other organizations working together to build power for social justice.

GCC questions how money was found for a Quicken Loans Arena makeover while social and safety services are stretched thin. When county council began discussions, GCC filled the council chambers and its members made a proposal. Dozens of people said in brief, three-minute public comments that they're all for the Cavs, but they want more.

The GCC speakers argued that if there is enough money for arena remodeling, there should also be enough money for better health, mental health and addiction services, and the physical redevelopment in Cleveland neighborhoods and the suburbs.

County council president Dan Brady in a telephone interview said council was not intimidated by the presence of the 100 to 200 demonstrators who have been coming to the meetings. But then he interjected, "maybe just by the very (high) noise level at the beginning."

But the reaction of council members suggests otherwise.

At the end of the March 14 meeting, before the vote was taken to move the legislation forward, many council members made formal, prepared statements of their positions, something Brady didn't expect until the final meeting on March 28.

"Quite spontaneously people just decided to go ahead and do it," he said.

Intimidated or not, several on council asked questions that suggested it was micromanging, a charge the part-time council has faced in the past.

In 2014, it was criticized when it considered a charter revision that would bar the county executive from firing the sheriff without council approval. Earlier, it was forced to shelve a plan for spending $500,000 a year to hire full-time assistants for each of the 11 part-time county council members.

The Cavaliers organization has asked for the legislation to move quickly. The team's back-to-back trips to the NBA Finals have resulted in seasons ending in mid-June.

That quick passage was an issue for council members Baker and Schron.

They were concerned about committing tax revenue to the arena renovation before the county could assess the impact the state budget making its way through the General Assembly will have on the county's financial condition. The state budget is not likely to be passed until June 30.

The timing is important to the Cavaliers, who operate The Q and will be managing construction. Cavaliers CEO Len Komoroski told council that delaying county approval until after June 30 would mean the Cavaliers would miss the summer construction season, likely pushing back completion. Komoroski also said that a delay could mean the cost of the debt that will finance the deal would increase, since interest rates are rising.

Schron, who runs a family tooling business, argued that if the county could build a 32-story hotel on the Mall in under two years, certainly the Cavaliers could speed up its construction schedule. Komoroski countered that building a standard design hotel on a cleared set was very different from doing a custom renovation of a sports arena while the building remains in use.

Similarly, Baker, a former state legislator, asked if the cost couldn't be shaved by having the Cavaliers pay the interest on one of the county-issued $70 million bond issues while the county would repay principle — unheard of in public finance.

Asked about that line of questioning, Brady conceded that, despite the months of negotiations between the Budish administration and the Cavaliers, some on council, "really wanted to negotiate themselves."

While not commenting on this specific legislation, Lisa Thomas, director of the Center for Leadership Development at Cleveland State University's Maxine Goodman Levin College of Urban Affairs, said in an email, "It is very difficult for non-financial experts to understand the intricacies of public finance deals. It involves a lot of trust in the people who negotiate the deals."

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